Contrary to the shock headlines, the hotly-anticipated ABS labour force data released this morning revealed what more pessimistic analysts had been predicting for weeks — the unemployment rate for March jumped 0.5%, to 5.7% from 5.2%, in February with the number of official unemployed now at the highest level since 2003.
In March, 34,700 total jobs were lost after 53,800 evaporated in February. Part-time roles expanded by an anemic 4,200. Bad, and higher than the general consensus, but not inconsistent with an economy going backwards.
Economists are now predicting that the jobless rate will top 10% by the middle of next year, ignoring both the underemployment number and Australia’s laughable statistical conservatism when it comes to declaring that someone is out of work. And evidence from frontline job services suggests that the situation is getting increasingly desperate with a parade of aimless souls hitting up Centrelink in once-thriving suburban manufacturing heartlands.
So what do the latest numbers mean for Australia in the midst of a recession? Are even grimmer forecasts now necessary? Have government’s stimulus packages made any difference? And how high could unemployment conceivably go? Crikey asked a group of leading commentators for their considered reaction:
Ricki Polygenis, ANZ: I think the deterioration in labour market conditions had been expected, given the slowdown in economic growth as well as the falls in labour market demand measures like the ANZ jobs ads series and general evidence of job shedding. So it’s a surprise that employment in Australia had managed to remain slightly positive up until this point, although it appears that’s no longer the case.
I think the Federal Government would have anticipated a fall in employment but I’m not too sure that they would have been anticipating the huge jump we’ve seen in unemployment. The month-on-month gain to 5.7% is the biggest rise we’ve seen in the unemployment rate since the 1990s recession.
We’re forecasting that the unemployment rate will rise to 7.5% by the end of the year and 8.25% by the end of next year.
Alan Oster, NAB chief economist: Jobs have been showing a more rapid deterioration that the statisticians had previously found and it’s starting to catch up. You’re in a process where you’re going to see further falls from month to month that are quite significant .Our previous forecasts were at 5.5%, so we were the most bearish of the analysts. We’re predicting a 6.75% rate by the end of the year and 7.75% by mid-to-late next year and there’s a risk that it could even go a touch higher. It’s consistent with the overwhelming view that this economy is going backwards.
The economy has slowed rapidly and the latest figures reflect basic gravity than anything else. Eventually these numbers were going to show up and this won’t be the last of these sorts of shock numbers.
I think the government needs to be careful about claiming stimulus packages can create jobs — what the they’re actually doing is stopping the economy form falling into a huge hole. The government is just minimising the damage and that’s basically about all you can do — you can’t produce something in a fiscal policy response that’s going to completely offset everything else that’s going on in the world. Those claims are just unreasonable — evidence suggests only about 20% of these packages are going to to be spent and the government stimulus just basically gives you time to get the infrastructure spending up and ready to go.
Joshua Gans, Melbourne Business School: There are no surprises here — this is broadly where things are going. The fact that New South Wales was the quickest decliner, from 6 to 7 per cent, seems like a fairly big indication that the recession is spreading rapidly. Generally, it’s hard to separate out whether the economy is falling into a recession or whether business are using the downturn as an excuse to cut jobs. The aggregate statistics don’t separate that out or distinguish between the two.
In terms of the number, it seems like this was in the expected range. It’s important to remember that we are still coming off an historically fairly low unemployment base. The latest numbers are exactly the sort of thing that people would expect so we shouldn’t be at panic stations. We still have substantial fiscal stimulus coming along and it remains to be seen what impact this will have on jobs.
Bill Evans, Westpac chief economist: The level of job loss is probably in line with their own forecasts and as a result we expect that they will hold the line next month both because of the need to assess the impact of previous stimulatory policies; assess the budget; and always being mindful of the limited flexibility which the Bank has in reserve. We retain our long held view that the low point in this cash rate cycle will be 2% but it will not be reached until the final quarter of 2009.
Julia Gillard, Deputy Prime Minister: What this means is that compared with March and February, and looking at total unemployment, the number of jobs has reduced by 34.700 across the economy. The 5.7% unemployment rate shows that the global recession is significantly hitting jobs across the Australian economy. This global financial crisis and the global recession has hit jobs around the world and is also having a significant impact on jobs in this country. These figures would be worse if we hadn’t acted to stimulate the economy through our nation-building packages. Behind these figures today are the faces of real Australians that now find themselves without a job. These figures will obviously be received by Australians as bad news. We will continue to support Australians and they deal with this news.